2Learning ObjectivesDescribe the major features of the online service sectorDiscuss current trends in the following online industries:financial servicestravel servicescareer services
3The Service SectorLargest and most rapidly expanding part of the economies in advanced industrial nationsIn the US, the service sector (broadly defined) employs about four out of every five workers and accounts for about 75% of all economic activityE-commerce in the service sector offers extraordinary opportunities to deliver information, knowledge, and transaction efficiencies
4What are Services?Service occupations are “concerned with performing tasks” in and around households, business firms, and institutionsThe major service industry groups include:Finance, insurance, real estateTravelLegal and accountingBusiness services – consulting, advertising and marketing, and information processingHealth servicesEducational services
5QuestionWithin these service industry groups, companies can be further categorized into two groups that provide services with very different characteristicsWhat are these two types of services?
6Categorizing Service Industries Services either involve transaction brokering or “hands-on” serviceTransaction brokering involves acting as an intermediary to facilitate a transactionIn hands-on services the service provider and client need to interact directlyWhich of these categories has been most impacted by e- commerce?
7Online Service Industries In this chapter we will focus on characteristics and trends in the three of the largest, and most successful, online transaction brokering industriesThese industries include:Online financial servicesOnline travel servicesOnline career services
8Online Financial Services Contributes over $3 trillion to the US GDP or about 20% of the total GDPFinancial services include:BankingBrokerageMortgage and lendingInsuranceReal estate
9Online Financial Service Industry Trends Two important global trends in the financial services industry have direct consequences for online financial services firms and overall industry structureThese trends include:Industry consolidationMovement toward integrated financial services
10Online Financial Consumer Behavior Consumers are attracted to financial sites because of their desire to save time and access information rather than save moneyAround 72.5 million households use online banking compared to just 46.7 million in 2005Most online consumers use financial services sites for mundane financial management, such as checking balances of existing accounts and paying billsOnce accustomed to performing these simple tasks, consumers move on to more sophisticated capabilities such as using personal financial management tools and making loan paymentsThe number of people using mobile devices for financial service needs is also surging
11Online Travel Services Travel and tourism in the US contributes over $400 billion to the GDPOnline travel is one of the most successful B2C e-commerce segmentsTravel is an information intensive product requiring significant consumer researchTravel market segments include airline tickets, hotel reservations, car rentals, and cruises/tours
12Online Travel Industry Dynamics Because much of what travel agency sites offer is a commodity, and thus they face the same costs, competition among online providers is intensePrice competition is intense because shoppers can comparison shop easilyTherefore, competition among sites tends to focus on scope of offerings, ease of use, payment options, and personalizationSome industry trends include:Industry consolidationUse of meta-search engines that scour the Web for the best deals and then collect finder or affiliate fees from travel siteIncreased use of mobile devices and apps
13Online Career Services Next to travel services, one of the Internet’s most successful online services has been job servicesThe top sites generate more than $1 billion annually in revenue from employers’ fees and consumer feesRecruitment market segments (Table 9.9)General recruitment sitesExecutive search sitesNiche job sitesThe professional social networking site LinkedIn is also becoming an increasingly important player in the marketIn 2011, it added a plug-in, Apply with LinkedIn, that allows job seekers to easily submit their LinkedIn profile to an employer’s Web site
14Online Career Services Trends Trends for in the online recruitment services industry include the following:Consolidation – industry dominated by two sitesDiversification – explosion of small niche sitesLocalizationJob search engines/aggregatorsSocial networkingMobile